Correlation Between Aberdeen Small and Prudential Qma
Can any of the company-specific risk be diversified away by investing in both Aberdeen Small and Prudential Qma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aberdeen Small and Prudential Qma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Small Cap and Prudential Qma Small Cap, you can compare the effects of market volatilities on Aberdeen Small and Prudential Qma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aberdeen Small with a short position of Prudential Qma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Small and Prudential Qma.
Diversification Opportunities for Aberdeen Small and Prudential Qma
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aberdeen and Prudential is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Small Cap and Prudential Qma Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Qma Small and Aberdeen Small is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aberdeen Small Cap are associated (or correlated) with Prudential Qma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Qma Small has no effect on the direction of Aberdeen Small i.e., Aberdeen Small and Prudential Qma go up and down completely randomly.
Pair Corralation between Aberdeen Small and Prudential Qma
Assuming the 90 days horizon Aberdeen Small Cap is expected to generate 0.83 times more return on investment than Prudential Qma. However, Aberdeen Small Cap is 1.2 times less risky than Prudential Qma. It trades about 0.05 of its potential returns per unit of risk. Prudential Qma Small Cap is currently generating about 0.04 per unit of risk. If you would invest 3,353 in Aberdeen Small Cap on August 30, 2024 and sell it today you would earn a total of 927.00 from holding Aberdeen Small Cap or generate 27.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aberdeen Small Cap vs. Prudential Qma Small Cap
Performance |
| Timeline |
| Aberdeen Small Cap |
| Prudential Qma Small |
Aberdeen Small and Prudential Qma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aberdeen Small and Prudential Qma
The main advantage of trading using opposite Aberdeen Small and Prudential Qma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Small position performs unexpectedly, Prudential Qma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Prudential Qma will offset losses from the drop in Prudential Qma's long position.| Aberdeen Small vs. Aberdeen Small Cap | Aberdeen Small vs. Aberdeen Small Cap | Aberdeen Small vs. Aberdeen Small Cap | Aberdeen Small vs. Needham Aggressive Growth |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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